BMI's Executive Summary

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The number of Hungarian mobile subscribers grew by 0.9% in the second quarter of 2007, confirming our belief that the Hungarian sector is far from stagnating, and our prediction that subscriber growth will continue throughout 2007 and beyond. Hungarian mobile subscriber growth in the first half of 2007 has already amounted to 1.7%, and this contrasts sharply with the 1% growth seen in the first six months of 2006. We continue to predict that total sector growth for 2007 will amount to 4.9%, which is lower than the 6.1% growth seen in 2006.

The market share of Hungary's three mobile operators remained roughly the same during 2006, and this balancing trend appears to have continued into the first half of 2007. Pannon GSM's share of the market remained stable at 45.7%, while T-Mobile's market share increased by 0.2 percentage points and Vodafone's share of the market fell by 0.2 percentage points. Following its losses in Q107, Pannon GSM appeared to be back in form in the second quarter, this time managing to beat T-Mobile with 48,000 new subscribers (representing nearly 55% of new subscriber additions).

One of the main changes introduced in our Q407 update on the Hungarian Telecoms market relates to Hungary's broadband sector. Based on new data provided by Hungary's regulator and various operators, we now believe that there were nearly 977,000 broadband internet connections in operation at the end of the year, which puts broadband penetration at 9.7%. Furthermore, according to the regulator, the number of broadband subscribers reached 1.1mn at the end of April 2007. Conditions for ADSL competition have improved considerably in recent months and, consequently, alternative operators have steadily increased their share of the ADSL market; by the end of Q207, incumbent Magyar Telekom had a 52% share of the total broadband market (including wholesale). Based on current growth trends, we believe that broadband penetration will reach 14% by the end of 2007.

Key developments in the Hungarian sector in the past few months include the announcement, in July 2007, that HTCC (also known as the Hungarian Telephone and Cable Corp.) had agreed to acquire the Hungarian business of Tele2, the Swedish alternative telecoms operator, for EUR4mn. Tele2 Hungary is a reseller of fixed-line telephone services using the network facilities of other operators. The company has approximately 490,000 active subscribers and, in 2006, reported revenues of HUF10.7bn (US$55mn). News of HTCC bid to acquire Tele2 follows the company's acquisition of Invitel in April 2007.

Moreover, in August 2007, it was reported that HTCC planned to market all of its products and services under a single 'Invitel' brand name. Prior to its acquisition of Invitel, HTCC marketed its products and services under three brand names: Hungarotel, PanTel and PanTel Technocom. The move to streamline its brands is further evidence that HTCC seeks to boost its competitive edge vis-à-vis Hungary's incumbent Magyar Telekom.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Business Environment

Hungary

Table: Emerging Europe Business Environment Ranking

Chapter 3 - Industry Forecast Scenario

Fixed-Line

Table: Hungarian Telecoms Sector Fixed-line Historical Data & Forecasts

Internet

Table: Hungarian Telecoms Sector Internet Historical Data & Forecasts

Mobile

Table: Hungarian Telecoms Sector Mobile Historical Data & Forecasts

Chapter 4 - Macroeconomic Forecast Scenario

Signs Of A Slowdown

Table: Nominal And Real GDP

Risks To Outlook

Chapter 5 - Country Snapshot: Hungary Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 6 - Competitive Landscape

Market Overview

Competitor Analysis

Table: Key Players: Hungary Telecoms Sector

Table: Selected Operators Financial Indicators

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Broadband Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data Analysis

Fixed Line

Table: Hungarian Local Market, Q306

Internet

Table: Hungarian Broadband Market, Q306

Mobile

Table: Hungary Mobile Market, Q306

Table: Hungary Mobile Market Net Additions, 2006

Industry Developments

Chapter 7 - Company Profiles

Regional Case Study: Alcatel

Table: Alcatel Recent European Contract Wins

Selected Profiles - Operators

Magyar Telekom

Invitel Telecommunications Services

T-Mobile Hungary

Pannon GSM

Vodafone Hungary

Selected Profiles – Manufacturers

Nokia

Ericsson

Siemens

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

Wages (ave labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Europe Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of European Telecommunications Sources

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BMI's European Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include:.